Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, October 12, 1993 TAG: 9310120090
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
SOURCE: The New York Times
DATELINE: MEXICO CITY LENGTH: Medium
The deal, in which Bell Atlantic will initially buy a 23 percent share of the privately owned company for $520 million, would put Iusacell in a position to expand aggressively in what has been a booming Mexican market in cellular phone services.
But both companies were quick to lay out a broader agenda: turning Iusacell into a wider-ranging telecommunications company that can begin to challenge Telefonos de Mexico, or Telmex, the monopoly the government sold to private investors in December 1990.
By next fall, after Bell Atlantic completes its purchase of a 42 percent share in Iusacell, the partners said they would begin operating a new network of fixed wireless phones that would compete with Telmex in providing basic phone service. In 1996, when the government is to break up Telmex's control over long-distance service, Iusacell hopes to get into that, too.
Bell Atlantic's strategy could be the forerunner of a North American, perhaps even a pan-American, wireless phone network led by the Philadelphia-based regional Bell company, analysts said.
Although Mexico's ravenous demand for phones has made Telmex a favorite stock of international investors, the company's service is notoriously poor.
Pay phones rarely work, lines cross frequently and they can often go down in little more than drizzle. Customers must sometimes wait more than a year to get a new line.
The North American Free Trade Agreement has focused attention on an enormous potential for growth. For every 100 people in Mexico, only seven or eight have telephones, compared with about 85 of every 100 people in Canada and the United States.
"As we say in the business, Mexico is very `under-phoned,' " said Douglas Clark, the head of Northern Telecom of Canada's subsidiary in Mexico.
by CNB